Unless the corporations' finances are sustainable, no one will buy their shares. Second, the bureaucrats say they will accept privatisation only if existing road-building plans do not change. Mr Koizumi says this is nonsense: the task of drafting privatisation plans must go to an independent authority. They have since agreed, but crucial issues remain unresolved.įirst, the mandarins want to be in charge of their own reform, a principle that the politicians have honoured in all administrative reforms up to now. At first, the bureaucrats flatly rejected Mr Koizumi's push to privatise these road-building enterprises. Yet its bureaucrats insist on a ruinous road-building programme that has the taxpayer shelling out for more road building in 2001 than in 1969, when Japan needed many more motorways and its economy was growing at 10% a year. The Japanese government is already the most heavily indebted in the world. Unlike existing motorways, the construction costs of future roads cannot be recouped through toll fees, explains the corporation, because traffic is expected to be light in the mountains. Because these new motorways will run through mountains and round cities, they will cost ¥5 billion or more per kilometre to build, suggesting total outlays of at least ¥25 trillion.
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Another 4,669km of motorways are planned, of which 2,213km are already under construction. Four of the seven build and manage roads and bridges, an activity that has come to represent everything that is wrong with Japan's political economy.Īccording to its latest annual report, the Japan Highway Public Corporation manages 6,851km (4,280 miles) of tolled motorways, whose charges are among the most expensive in the world. Although, with a couple of exceptions, they are not the most heavily subsidised, these corporations have been chosen for what they symbolise. So he has singled out seven corporations for special attention. Mr Koizumi's reforms, concede aides, have quickly become an uphill struggle. Because bureaucrats retire in their mid-50s, and can serve on the public corporations well into their 80s, some become seriously rich. By regularly shuffling from job to job among the public corporations, in just ten years top civil servants can earn $1m or more in lump-sum retirement pay alone, half of which is exempt from income tax. The ex-bureaucrats reward themselves handsomely. On the contrary, the mandarins are not even prepared to admit there is anything wrong. Yet up to now, not a single former bureaucrat has resigned to take responsibility for this epic mismanagement. The government forks out more than ¥5 trillion ($41 billion) a year in subsidies just to keep them afloat. Only extreme unaccountability can explain the operation of these special corporations. Their relationship with the public is captured, with characteristic Japanese economy, in the phrase kanson minpi-respect for authority, contempt for the masses. On retirement, they “descended from heaven”, as their own saying has it, into cushy jobs in the private sector, or the myriad special corporations that mushroomed after the war. In office, the mandarins busied themselves with economic micromanagement, helping to make Japan's mixed economy really very mixed indeed.
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After the second world war, the new constitution, written with American help, gave sovereignty to the people. Under the imperial restoration of 1868, these bureaucrats became servants of the emperor, who claimed divine descent. The bureaucrats of feudal Japan were samurai, the old elite warrior class, who had hung up their swords during the long peace of the Tokugawa shogunate. This emerges from the baggage of Japanese history.
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But Mr Koizumi's fight with the bureaucrats has a deeper dimension. If the private sector can do the job, he says, the state should not, a principle that he wants to make the basis of his public-sector review, due by the end of December. On one level, Mr Koizumi is borrowing from the economic textbooks of the West. His targets are the government's 163 “special corporations”-state-owned businesses whose interests span everything from home loans to oil exploration. Poor Mr Koizumi, smile the mandarins, still believes he can win. Now Japan's latest prime minister, Junichiro Koizumi, is launching another assault on the bureaucrats' kingdom.
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Ryutaro Hashimoto settled for cosmetic change and lost the support of the voters. Mr Hosokawa was gone in less than nine months. Equally unchanging has been the record of failure. Curbing bureaucratic power has been at the top of almost every Japanese government's agenda since Morihiro Hosokawa took office in 1993. But the aspirations of Japan's political leaders stay the same.